China still welcomes foreign investment: minister

By IBT Staff Reporter On 03/22/09 AT 7:40 AM

China's commerce minister said on Sunday that the country was still open to foreign investment after the government rejected Coca-Cola's $2.4 billion bid to buy top Chinese juice maker Huiyuan <1886.HK>.

Some Western media had interpreted this rejection as meaning China did not welcome foreign investment, but this is a big misunderstanding, Commerce Minister Chen Deming told a forum in Beijing.

Chen said the rejection of the U.S. drinks giant's proposal had had nothing to do with China's investment policy, as both Coke and Huiyuan were technically foreign firms. Huiyuan is listed in Hong Kong and registered in the Cayman Islands.

He repeated the government's objection that a tie-up would have been bad for competition and hurt consumer choice.

We still hope that both Coke and Huiyuan can develop in a very healthy way in China, Chen said, according to a transcript of his remarks carried on the website of Communist Party mouthpiece the People's Daily (www.people.com.cn).

We also hope that other companies come and invest in China, he added.

Huiyuan controls more than one tenth of a Chinese fruit and vegetable juice market that grew 15 percent last year to $2 billion. Coca-Cola has a 9.7 percent market share.

The ruling fanned concern among industry analysts and trade lawyers that China would use its anti-monopoly law to fend off foreign attempts to buy promising domestic firms, even when the resulting market concentration would not be excessive.

But Chen said the government had approved many acquisitions by foreign companies since the anti-monopoly law was enacted.